The new government of British Prime Minister Liz Truss has announced the biggest package of tax cuts in half a century, aimed at boosting growth in a UK economy that may already be in recession.
Prime Minister Kwasi Kwarten, who unveiled a mini-budget in the House of Commons on September 23, confirmed that the corporate tax and national insurance premium hikes planned under the government of former Prime Minister Boris Johnson have been cancelled.
Plans to borrow more than £70bn ($77bn) to abolish top income tax rates on top earners and reduce basic income tax rate to 19p per pound were brought forward a year early in April , the stamp duty for home buyers has been reduced.
He confirmed plans to remove caps on bankers’ bonuses while placing limits on the welfare system.
The package comes a day after the Bank of England warned that the UK may already be in recession and raised interest rates to 2.25%, the highest level in 14 years.
The prime minister claimed his economic vision would “turn a vicious cycle of stagnation into a virtuous cycle of growth”.
he said: This made it difficult to pay for public services, necessitating tax increases. As a result, higher taxes on capital and labor reduce returns on investment and labor, lowering economic incentives and further hindering growth. ”
He added: We need a new approach for a new era, focused on growth. ”
Paul Johnson, director of the Fiscal Institute, an economic think tank, called the package “the biggest tax cut event since 1972.”
He told BBC News: It could pay off. ”
But he said he was concerned that “the government is now pumping tens of billions of dollars into the economy at a time when inflation is very high.”
The main opposition Labor party called the package an acknowledgment of an “economic failure” on the part of the Conservative government.
Labour’s shadow prime minister, Rachel Reeves, likened Truss and Quarten to “two desperate gamblers chasing losses in a casino”.
But the business community welcomes the government’s new economic direction.
The Confederation of British Industry (CBI) called this the ‘economy tipping point’.
CBI Executive Director Tony Dunker said: We must now take this opportunity to make it matter and bring growth to every corner of the UK. ”
“Businesses across the UK will enthusiastically welcome the Prime Minister’s pledge to focus on economic growth and accelerate new infrastructure development,” said Shevaun Havilland, secretary general of the British Chamber of Commerce. .
The Adam Smith Institute, a free market think tank, said it was “incredibly encouraging to see so many pro-growth policies.”
The London-based Institute for Economic Affairs (IEA) also called it a “very promising start”.
IEA Executive Director Mark Littlewood said, “It’s refreshing to hear the prime minister talk passionately about the importance of economic growth and supply-side reforms, rather than rattling off a series of national spending pledges and tax increases.”
PA Media contributed to this report.